International Financial Reporting Standards (IFRS)

IFRS for Small and Medium-sized Entities (SMEs)
Section 15: Investments in Joint Ventures

1. Joint venture
--> joint control by two or more parties (venturers)

2. Three forms of joint venture
(1) jointly controlled operations
(2) jointly controlled assets
(3) jointly controlled entities

3. For jointly controlled entities
--> venturers can choose one of the following methods
(1) cost model
(2) equity method
(3) fair value model

4. Cost model
--> cost less accumulated impairment losses

5. Equity method
Initial measurement
--> at transaction price
--> including transaction costs

Subsequent measurement
--> investor's share of profit or loss is added
--> distributions received are deducted
--> impairment loss is deducted if impaired

6. Fair value model
(1) initial measurement at transaction price
--> not including transaction costs

(2) subsequent measurement at fair value
--> changes in fair value are recognised in profit or loss